The growth imperative - CEO Agenda 2004

Chief Executive, The, Dec, 2003 by Rick Wagoner

ON RECENT TRIPS to Europe and the Asia-Pacific Region, I've been reminded yet again of the critical importance of strong economic development in countries around the world. In Europe in general, and Germany in particular, growth has been anemic for several years. Until very recently, Japan has had it even harder, with slow-to-no domestic growth for a decade. No surprise that both Germany and Japan are grappling with high levels of unemployment, plant closings, slow job creation and low wage growth. In the auto industry, there is little domestic sales growth in either of these markets and considerable pressure on automakers to increase exports, especially to the United States.

Then there's China, where annual economic growth has averaged 7 to 8 percent in recent years, with no letup in sight. Despite the relatively small size of its economy, China is now contributing more to global growth than Japan and Germany combined. The impact has been tremendous--Chinese auto sales have grown at an unbelievable 40-percent per-annum rate over the past couple of years. In fact, China will pass Germany this year to become the world's third-largest auto market, and is on track to become the second-largest market, surpassing Japan.

All this begs an obvious question: Are we, as CEOs, doing all we can to encourage economic development in the countries and markets where we conduct business?

The benefits of economic growth are, of course, well documented-more jobs; rising standards of living; growth in investment capital; increased tax revenues for education, health care and social programs; and more rapid technological development.

Development is essential for two other important reasons. First, investors have a growing range of choices of countries in which to deploy their capital and other resources. Therefore, in order to compete, every country has to make itself an attractive place in which to do business. Second, in today's increasingly interconnected economy, the long-term health of all regional economies requires balanced global growth. For too long, the global economy has been running on pretty much one cylinder--the United States. That can't go on indefinitely.

But while the benefits of economic development are clear, too often when we as business leaders think about it, I'm reminded of Mark Twain's famous observation that "everyone talks about the weather', but nobody does anything about it." Well, as business leaders, we can do something about economic growth, and I believe it's incumbent on us to try.

The first thing we can do is to make sure our own houses are in order. By taking the actions necessary to ensure our own companies' future financial health, we promote growth within our companies, and position ourselves to contribute to, and take full advantage of, economic development.

Putting our own houses in order entails several things:

Do the essential. We need to make the tough decisions that keep our cost structures competitive; never be satisfied with our current quality or productivity; dedicate our companies and ourselves to continuous improvement in everything we do; and invest in our companies' future by devoting ample resources to innovation and new ways of doing business.

Take calculated risks. Grow existing markets by redefining product segments, or establish entirely new ones; create new brands when the opportunities arise; and broaden and leverage existing customer relation ships by offering new services and technologies.

Look beyond the visible horizon. We must position ourselves for growth in new markets, like China, and reach beyond our comfort zones to ensure that we are at the forefront of the next generation of products and technologies.

In addition to promoting long-term, sustainable growth within our own companies, we as business leaders also need to proactively promote economic development wherever we do business. I believe we have a special responsibility to communicate the benefits of economic growth to our societies. We can, and must, work more closely with governments to promote policies that enhance economic development.

Growth is not a question of conservative versus liberal, of right versus left, of pro-business versus anti-business. Economic development is something that benefits everyone by reducing unemployment, improving standards of living, advancing technological development and increasing tax revenues for education, health care and social programs. It's in everyone's best interest.

As business leaders, we need to make it clear that robust economic development is not simply a vehicle for increasing corporate profits. It's an opportunity to grow the entire economic pie, so everyone can get a larger slice. Economic growth isn't about keeping people down; it's about raising societies up. Look around the world today--the nations that are best able to provide for their citizens are the ones with vibrant, healthy, growing economies.

Another thing business leaders can do to promote development is prepare for opportunities to promote growth within our industries, or even the economy at large. That's a tall order, for sure, but one that I subscribe to fully. Consider the case of the U.S. auto industry two years ago, following the terrorist attacks of September 11.